Farm income, farm household spending and capital equipment expenditures in the Eighth Federal Reserve District all declined in the fourth quarter relative to one year prior, according to the Federal Reserve Bank of St. Louis’ most recent Agricultural Finance Monitor. The publication covers agricultural credit conditions in the Eighth District, which comprises all or part of seven states.1 Results are based on survey responses from 39 agricultural banks within the boundaries of the Eighth District.2
Quality farmland values in the Eighth District increased on average 0.8 percent from one year ago, but survey respondents were pessimistic about farmland values over the next three months. On the other hand, pastureland values declined 2.6 percent from one year ago, but respondents gave mixed responses about future values.
Similarly, cash rents for quality farmland increased on average 3.6 percent from one year ago, while respondents overall saw downward pressure on values over the next three months. Pastureland cash rents declined 2.1 percent from one year ago, while respondents were mixed on future values.
More respondents said farm income fell in the fourth quarter of 2014 compared with the same period one year earlier. The actual index value for the fourth quarter (78), while moderately low, is stronger than the assessment bankers offered for farm income over the next three months (61).3 Readers are cautioned that farm income is highly volatile and subject to seasonal patterns that occur in the agricultural sector.
Perhaps not surprisingly, farm household spending and capital equipment expenditures were also down in the fourth quarter relative to one year earlier. Respondents expected further declines in the first quarter of 2015.
A modestly larger proportion of bankers (index value of 114) reported an increase in loan demand in the fourth quarter relative to the same period one year ago. Bankers were equally divided, however, on their views of loan demand over the next three months relative to one year ago (index value of 100).
1 The Eighth District’s states are Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.
2 Due to a change in reporting, this publication no longer reports dollar figures for farmland and cash rents, as it had in previous issues.
3 Index results above or below 100 indicate proportionately higher or lower lender values.